President Trump came in for much jeering when he told reporters he had “inherited a mess” from President Barack Obama. On the economy, though, Obama did indeed leave behind a hidden mess: a seemingly healthy jobs market dependent on cheap debt.
(Article by Nicole Gelinas republished from NYPost.com)
When this debt bubble bursts, just as the last one did, the manufacturing jobs Trump wants to save will be in even greater peril.
The country’s last bubble was in housing. Between 2000 and 2007, Americans nearly doubled their mortgage debt, from $5.9 trillion to $10.6 trillion.
This didn’t bother anyone in a position of power. The housing boom created millions of jobs, from construction to home-furnishing, and people felt rich.
What bothered the pols was when the illusion broke.
Since the 2008 crash, neither Democrats nor Republicans have been interested in creating a sturdier economy. Instead, they’ve built up another bubble, this time in the car and SUV industry.
How? The same way: cheap debt. In 2010, Americans owed $809 billion on their cars (after adjusting for inflation). Today, they owe nearly $1.2 trillion, according to the New York Fed.
And the rate of growth has been accelerating: Last year alone, Americans borrowed $93 billion to buy cars (after accounting for people who repaid such debt); 2016 was “the highest auto loan . . . year in the 18-year history of the data,” Fed researchers said, not entirely enthusiastically.
Read more at: NYPost.com